American Acquisitions In Europe Up Sharply

By JONATHAN FUERBRINGER

Published: August 29, 1990

Correction Appended

American acquisitions of European companies, led by the purchase by Philip Morris of the Swiss chocolate maker Jacobs Suchard, rose sharply in the second quarter after a sluggish performance in the first three months of the year.

The 53 deals, up from 37 in the first quarter, showed that American companies were still positioning themselves for European economic unity, scheduled for late 1992, by getting a foothold in Britain and on the Continent. The total value of the 17 transactions for which prices were reported was $5.5 billion.

Other data show, however, that total acquisitions by American companies worldwide slowed slightly in the first six months of the year.

One Big Deal

With the Jacobs Suchard deal worth nearly $4 billion, or more than two-thirds the quarterly total of all United States deals in Europe, the value of reported American acquisitions in the second quarter was the second highest in the last 18 months.

Without the Suchard deal, the value of acquisitions, although up in the second quarter, was not as strong when compared with other quarters also adjusted for removal of large deals. Nevertheless, the number of second-quarter deals was far greater than in the first quarter and more than the average quarterly pace of the last six quarters.

''It definitely is not evidence of a slowing down,'' said Mark Dixon, editor of Translink's European Deal Review, which compiles the merger and acquisition data. ''If anything, it is evidence of a speeding up.''

According to Translink, American, Japanese and European companies were involved in a record 394 mergers or acquisitions in Europe in the second quarter. The total value of the deals in which prices were reported was 17,847 European currency units - an E.C.U. is a basket of European currencies - just below the record 17,933 E.C.U.'s in deals in the third quarter of last year.

Because the dollar has weakened against major European currencies since last year, the dollar value of the acquisitions rose to $21.7 billion in the second quarter, compared with $19.6 billion in the third quarter of 1989.

The Jacobs Suchard deal, at about $3.8 billion, accounted for 68.9 percent of the total value of the American deals in the second quarter (17 percent of all the deals) in which prices were reported. It was the largest single deal in the last 18 months. Switzerland is not one of the 12 countries in the European Economic Community, but Jacobs Suchard gives the Philip Morris Companies access to the community because of the large business it does there.

The remaining 16 priced American deals in the quarter totaled $1.7 billion. The largest of these was a $506 million purchase by the GTE Corporation of Thom Lighting in Britain.

While this $1.7 billion was more than twice the $731.7 million in deals during the anemic first quarter, the level was still below other recent quarters. The total of all deals for the fourth quarter of 1989 was $4.2 billion; the third quarter was $7 billion, and the average of all deals in the first two quarters of 1989 was almost $2 billion.

The Translink data also show that the Japanese continue to be relatively small players in Europe. Japanese companies ranked 10th on the list of acquirers there in the second quarter. Their 27 European deals in the first six months of the year, with a reported value of $924.6 million, were about the same as last year.

Correction: September 1, 1990, Saturday, Late Edition - Final An article in Business Day on Wednesday about American acquisitions in Europe included an incorrect report from Translink's European Deal Review about a transaction between the GTE Corporation and Thorn Lighting in Britain. While GTE is discussing the acquisition of Thorn Lighting, no agreement has been reached.